The largest broadcasting company in the world, Comcast, has just decided to drop the $45 million deal to buy Time Warner Cable. This comes as a result of regulatory impediments, as Comcast would have become an internet censorship element. The merger would have brought major risks to competition. This might have even prevented online video providers to be able to reach customers, according to a written statement issued by Tom Wheeler, Federal Communications Commission Chairman.
A merger of the two largest cable companies would have created a company that would gain control over what most Americans download from the Internet (as 55 percent of broadband users would be theirs) and watch on TV (since they would own almost 30 percent of TV subscribers). This could have led to higher costs and less to choose from, prompting most consumer groups and companies ( such as Dish, Web Video, Sling TV or Netflix) providing the same services to oppose the deal.
Brian Roberts, Comcast Chairman and CEO, stated in an interview to CNBC that the details of the deal were structured in such a way as to allow them to pull out of it anytime.
However, it is very likely that companies will continue to merge, even if this deal was dropped. Time Warner Cable has other suitors which have been trying to get the giant company under their umbrella for quite a long time now. Among them, Charter Communications Inc. , the fourth largest cable provider in the U.S.A, is expected to renew its attempt to get the cable company. It would not be their first try. They were rejected last year, in January, when they bid for Time Warner Cable Enterprises Inc. At the time, TWC was not interested in cutting a deal with them, and, according to analysts, they might be even more reluctant to this prospect now. This is mainly because the company’s value has risen since Comcast bid for them. Rumors said Charter representatives have already approached Time Warner. They had already announced that they would give it another shot if the deal failed
Nevertheless, if the two companies decide to merge, they would still have fewer customers than Comcast alone, which currently has 22.4 million subscribers, as the maximum number they could reach is 15 million video users and 16.5 Internet customers.
Whatever turn this takes, one thing is for sure – this was a huge deal that fell through and it comes with both losers and winners. Comcast has definitely lost a chance to monopolize the internet and cable services providers while the competition has been given a chance to thrive.
Image Source: addweek
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